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8 Cards in this Set
- Front
- Back
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tax multiplier
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used to calculate changes in real GDP that result from tax changes
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tax multiplier
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=-MPC / MPS
or =1 - autonomous spending multiplier |
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balanced budget multiplier
is always equal to what? |
1
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crowding out
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occurs when increased public sector activity reduces, or crowds out, private sector activity
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supply-side policies
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designed to stimulate output, or aggregate supply
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marginal tax rates
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the rate applied to additional personal and business income
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Laffer Curve
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tax revenue increases as the marginal tax rate increases, hits a maximum, and then begins to decrease beyond some relatively high marginal tax rate
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regressive tax
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a tax is regressive if
the average tax rate falls as income rises |
